Eskom’s plan to go from R55 billion loss to R10 billion profit in one year

Eskom is expecting a major turnaround in its financial performance in the current financial year, with the utility forecasting a R10 billion profit compared to a R55 billion loss in its previous reporting period. 

This was revealed by CEO Dan Marokane in the utility’s overview of its performance during the first six months of the 2025 financial year, following the release of its financial statements for the prior year. 

Eskom’s financial statements for the 2023/24 financial year revealed the monetary impact of the worst year for load-shedding on record. 

The utility posted a R55 billion after-tax loss due to an accounting adjustment and increased diesel expenditure to stave off higher stages of load-shedding. 

While its revenue grew by a strong 14% to R295.81 billion, its primary energy costs – the cost to produce electricity – rose by 11%. 

Eskom CFO Calib Cassim said a poor operating performance translates directly into poor financial performance. 

As Eskom fails to meet demand, loses out on sales, and is forced to use more expensive means to generate electricity, such as diesel open-cycle gas turbines (OCGTs).

The good news is that Eskom’s operational performance has improved remarkably since the end of March, with no power cuts being implemented during the current financial year ending 31 March 2025. 

In his update on the first six months of this financial year, Marokane revealed a much-improved performance from Eskom. 

Plant availability has improved to 62.97% from 55.27% during the same period in the previous financial year. 

This has resulted in no load-shedding since the end of March, saving the utility R11.9 billion in diesel expenditure year-on-year. 

Alongside other cost-cutting measures and the accounting adjustment being a once-off hit taken during the last financial year, Eskom expects a profit after tax of more than R10 billion in FY2025. 

A profit in the next financial year would be Eskom’s first since 2017.

This is a remarkable turnaround has been attributed to the greatly improved performance of Eskom’s coal-fired power plants as a result of its Generation Recovery Plan implemented from March 2023. 

The improved performance of these plants can be seen in the graph below, showing the decline in unplanned losses within Eskom’s Generation Divison. 

Eskom’s improved operational performance through the Generation Recovery Plan has been coupled with a Profit Maximisation Plan (PMP) to limit cost growth and improve cash flow. 

In a performance update presented to the Standing Committee on Public Accounts (Scopa) on 9 October, the utility outlined the PMP and its intended effect. 

The PMP is a two-year plan that has several savings targets to ensure Eskom breaks even in year one of the programme (FY2025) and becomes profitable in the second year (FY2026). 

Ultimately, the PMP aims to make the utility financially sustainable in the coming years and reduce its reliance on government funding.

Eskom is already saving billions by using significantly less diesel to run its OCGTs. From 1 April to 22 August 2024, Eskom’s diesel expenditure was R3.59 billion, 75% less than the same period last year. 

This translates into R10.6 billion in savings for the utility. 

However, this is not enough to break even, with Eskom’s board setting a target of R16.2 billion in cost-saving measures for the 2025 financial year. 

The plan focuses on ‘quick wins’, such as improving the utility’s overall efficiency and minimising the impact of high-cost initiatives like running OCGTs. 

It also aims to enhance the collection of municipal debt, reduce theft and find new revenue opportunities. 

If these initiatives can continue into the next financial year, Eskom estimates it could return to profitability in FY2026 with a profit of around R12 billion. The utility is also targeting a profit margin of around 10%. 

Eskom is also expected to receive a significant boost in revenue from increases to the electricity tariff charged to consumers in the coming years. 

Eskom has requested total revenues of R446 billion for the 2026 financial year, R495 billion for 2027, and R537 billion for 2028.

The proposed average price hikes for Eskom’s direct customers are 36.15% for the period from 1 April 2025 to 31 March 2026.

For the subsequent years, the utility is seeking increases of 11.81% from 1 April 2026 to 31 March 2027 and 9.10% from 1 April 2027 to 31 March 2028.